Task 1- Calculate the duration

Task 1- Calculate the duration of an 8%, $1000 par bond that matures in three years if the bond’s yield to maturity is 10% and interest is paid semiannually. a- Calculate this bond’s modified duration b- Assuming the bond’s yield to maturity (YTM) goes from 10% to 9.5 percent, calculate an estimate of the price change. Show your work Task 2 Two years ago, you acquired a 10-year zero coupon, $1000 par value bond at a 12% YTM. Recently you sold this bond at an 8% YTM. Using semiannual compounding, compute the annualized horizon return for this investment. Show your work Task 3 A bond for the Chelle Corporation has the following characteristics: Maturity = 12 years Coupon = 10% Yield to maturity = 9.5% Macaulay duration = 5.7 years Convexity = 48 Noncallable a-Calculate the approximate price change for this bond using only its duration assuming its yield to maturity increased by 150 basis point. Discuss the impact of the calculation, including the convexity effect. b-Calculate the approximate price change for this bond (using only its duration) if its yield to maturity declined by 300 basis points. Discuss (without calculation) what would happen to your estimate of the price change if this was a callable bond.